Appeal from the Circuit Court of Champaign County; the Hon.
Harry E. Clem, Judge, presiding.
JUSTICE MORTHLAND DELIVERED THE OPINION OF THE COURT:
This appeal involves a curiously labeled securities case. We reverse.
Plaintiff, Richard Boldon, brought suit to recover, pursuant to the Illinois Securities Law of 1953 (Act) (Ill. Rev. Stat. 1983, ch. 121 1/2, par. 137.1 et seq.), money invested in defendants' business. Specifically, plaintiff sought rescission of an investment contract based upon the defendants' failure to comply with the filing requirements of section 4(G) of the Act (Ill. Rev. Stat. 1983, ch. 121 1/2, par. 137.4(G)). Certain sales of "securities" are made voidable under the provisions of the Act at the option of the purchaser, thereby creating a right of rescission. (Ill. Rev. Stat. 1983, ch. 121 1/2, par. 137.13.) The circuit court of Champaign County, without any written explanation or conclusions of law, dismissed count I of the plaintiff's amended complaint with prejudice. This appeal followed.
On July 22, 1980, plaintiff and defendants entered into a written contract whereby plaintiff paid $5,000 as a "non-refundable investment" in the defendants' business, known as "Firearms Unlimited." In return, plaintiff was to receive as a commission 2 1/2% of the monthly gross profits while in the defendants' employ. The contract also recited specific duties that the plaintiff, as employee, was to perform. Furthermore, the contract contained the following language:
"In consideration hereof, the employee is entitled to the following benefits:
(1) All currently produced firearms on a pre-ordered, prepaid basis at dealer's costs plus handling and sales tax. Handling costs shall include among other costs such items as shipping costs, long distance telephone calls, etc.
(2) All currently made related items in the gun field at dealer costs plus handling and sales tax on a pre-ordered, prepaid basis. Related items include ammunition, cleaning kits, gun cases, etc."
Pursuant to the contract, plaintiff did in fact purchase firearms and ammunition from defendants during the years 1980 and 1981.
Apparently, the employment relationship between the parties deteriorated. In a letter dated April 23, 1982, plaintiff notified defendant of his election to rescind the contract. Plaintiff subsequently filed a complaint on June 24, 1982, to recover the amount paid under the contract plus interest and attorney fees. Plaintiff based his claim on the fact that defendant had failed to file a proper statement of their securities transaction pursuant to section 4(G) of the Act (Ill. Rev. Stat. 1983, ch. 121 1/2, par. 137.4(G)).
As a matter of procedural history, defendant filed a motion to dismiss alleging plaintiff's failure to plead the requisite notice and tender requirements under the Act. The circuit court, on March 4, 1984, granted the defendants' motion. Plaintiff then filed count I of his amended complaint on March 22, 1984. This time plaintiff alleged that proper notice of election had been made within six months of learning that the sale was voidable. Nevertheless, the circuit court, on motion of the defendant, dismissed count I of the amended complaint.
Plaintiff filed a second amended complaint on June 14, 1984, under which he alleged, among other things, that no securities were ever received from the transaction in question, and that plaintiff thereby tendered his only copy of the contract to the court. Plaintiff also, for the first time, made the following allegation:
"No income or interest has been received by the Plaintiff on the securities in question. Plaintiff did, however, purchase various guns and ammunition under the agreement for various prices paid to the defendants. Plaintiff still has all the guns and ammunition purchased from the defendants under the agreement and stands ready, willing and able to tender said guns and ammunition into the Court in return for the return of the purchase prices by the Defendants."
The defendants subsequently filed another motion to dismiss, again contending that plaintiff had failed to meet the tender requirements of the Act. On February 1, 1985, the circuit court of Champaign County, without a written order, dismissed count I of the plaintiff's second amended complaint with prejudice. On April 24, 1985, upon motion of the plaintiff and over defendants' objection, count II as previously filed was dismissed without prejudice. Plaintiff then instituted this appeal.
• 1 We should note, first of all, that this matter is peculiarly characterized as a securities transaction. No securities of any form were ever issued. Plaintiff simply paid $5,000 to the defendant as an investment in the latter's business; plaintiff was then entitled to a certain commission, required to perform certain duties and responsibilities, and was able to purchase guns and ammunition at dealer's cost. In point of fact, neither party contests that this matter falls within the ambit of the Illinois Securities Law. Plaintiff calls our attention to, and we are cognizant of, the statutory definition of a security, which includes any ...